Abilene City Council approves tax reinvestment zone plan

The Abilene City Council approved a final project and financing plan for its second Tax Increment Reinvestment Zone, a financing strategy the city plans to use to help fund around $19.76 million in projects within the designated area.

The TIRZ encompasses about 1,610 acres, containing property of an initial taxable value of $114.79 million.

That value is essentially frozen, meaning anything collected over that value throughout the life of the zone can be used for public works, improvements, programs, and other projects that benefit the zone.

The plan was originally taken to the City Council in February 2015 and was pulled from the agenda before it was considered.

Since then, the city has embarked upon a new hotel development and a community-wide downtown redevelopment initiative.

City staff reviewed the original plan and recommended changes to reflect the need to use hotel-generated property taxes to pay for the debt service associated with the hotel project and to use TIRZ revenues to assist in funding repairs for a festival district and needed amenities and upgrades to the Convention Center.

The zone's funding source is the property tax that residents and others presently pay, said City Manager Robert Hanna.

"The property tax that's generated in that zone that's above the base value (of) $114 million gets pulled off and placed in this fund," he said. The rest goes to city's general fund.

Abilene was the first municipality in the state to create a Tax Increment Financing Board, which sunsetted in 2007, that helped jump start downtown development, said Mayor Anthony Williams.

"I think this TIRZ before us today also has the opportunity to be very dramatic," Williams said, noting that there is a citizens' advisory committee that oversees those funds and works with staff.

That committee serves as a "filter for the citizens to be sure the money spent is being spent wisely," he said.

Councilman Steve Savage, who voted against the adoption, expressed concern that some within the zone would benefit from the projects "with no skin in the game," for example, entities that are tax-exempt.

"What we can control is what we spend and when we spend it," Savage said.

Hanna said that he couldn't alter the tax-exempt status of certain entities within the TIRZ, but noted that some — like Hendrick Health System — actually do pay considerable taxes on some of the properties they own.

"The lay of the land is what it is; we can't change that," Hanna said. "But making those improvements increases the economic viability of the entire district."

Any incentives or expenditure of funds within the zone would have to be compliant with the project plan, and the plan can be altered, Hanna said.

The proposed projects are:

$6.5 million in streetscape, pedestrian and parking improvements.

$4.26 million in festival district and convention center improvements.

$4 million in hotel facilities and amenities

$1.5 million in roadway and utility improvements.

$1 million in drainage improvements.

$1 million in areawide public improvements and amenities.

$500,000 in property acquisition.

$500,000 in building façade improvements.

$500,000 in environmental remediation, demolition, and land clearing,

In other business, the council began the process necessary to finance installing "smart" water meters throughout Abilene's water system.

At its Oct. 25 meeting, the council will vote to issue $18.37 million in bonds to purchase and install the meters.

"We believe there will be some significant savings associated with this project through reduced expenses, such as reduction in meter-reading staff," said Rodney Taylor, director of water utilities, who also citing improved billing and reduced leak adjustments as benefits.

"We believe that these types of savings and cost reductions will come very close to offsetting the debt service associated with this debt issuance," Taylor said.

The new meters will help spread warnings to customers either individually or throughout the city.

"Leak detection on these smart meters can detect low-flow leaks and extremely high-flow leaks and provide alarms to the utility and even to the customer where we can respond almost immediately to investigate it rather than (have) these leaks continue for a long period of time," he said.

A selection committee is looking at proposals and will present recommended contracts to the council in October, Taylor said, at the time "binding commitments" will need to be made.

The bonds will be purchased by the Texas Water Development Board using Clean Water State Revolving Funds at a substantially reduced interest rate. The interest rate will be determined prior to approval of the issuance.